The US economy is taking a hit from rising levels of inflation, and people have turned to Bitcoin as a store of value. A professor at the Wharton School of the University of Pennsylvania is now urging the US Federal Reserve to raise interest rates and protect the dollar from a possible Bitcoin take over.
Finance professor Jeremy Siegel notes that Bitcoin could “take over” the dollar; therefore, the Federal Reserve must step in and protect the fiat currency from devaluation.
Fed Needs To Defend the Dollar from Bitcoin
Siegel appeared in an interview with CNBC where he discussed how Federal Reserve Chairman Jerome Powell was handling recent events in the US economy. The Federal Reserve has been talking about raising interest rates in March, but this may not happen after the Russia-Ukraine crisis.
“The Fed has been very wrong and they are going to have to catch up. They are going to have to really admit–we got to bite the bullet. We got to defend the dollar here. We talk about bitcoin taking over. We got to defend the dollar.”
Jeremy Siegel
This week, Powell appeared before the House Financial Services Committee, but did not talk about raising interest rates. However, he addressed the situation between Russia and Ukraine and said that it could create complications.
Jeremy attacked the Federal Reserve for its lack of agility in controlling rising levels of inflation. Last year, the institution had said that the inflation levels were temporary, but now it seems to be an incorrect prediction, since the levels increase every day.
Siegel points out that the Federal Reserve should take action to control inflation despite the events in Ukraine. He added that if the institution does not do so, Bitcoin poses a great threat.
Bitcoin as a hedge against inflation
Bitcoin is referred to as a hedge against inflation because it has a limited supply of 21 million coins. Bitcoin’s tokenomics means it is immune to devaluation compared to fiat currency, where money is printed by central banks.
Several Bitcoin supporters have stated that the purchasing power of the dollar will continue to depreciate.
Cynthia Lummis, a US Senator and Bitcoin HODLer, has also raised concerns about the future value of the dollar. However, Bitcoin continues to be the subject of opposition from prominent politicians, including former US President Donald Trump, and the former presidential candidate Hilary Clinton.
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